An obstacle on

Maha Shivratri

Rakesh Wadhwa

Kathmandu

It was Maha Shivratri. My wife, Shalini and I were in a car and passing through Nag Pokhari in Kathmandu. Suddenly, the chauffeur brought the car to a screeching halt. Some 12-14 children stood with a rope blocking our way. Without thinking, more as a reflex, I took out Rs.50 from my wallet and handed it to the leader of kids and we were on our way again.

No big deal, you might think, everyone driving a car has experienced this rather harmless collection effort of boys and girls in Nepal. I started discussing with Shalini, “What do kids do in the US when they want extra pocket money?” “They might run a lemonade stand, mow the neighbours lawn, wash cars, or deliver newspapers”, said Shalini.

Whatever the kids might do in America, not once have we seen them holding up the traffic and demanding payment. They make money by selling a good or providing a service. This involves a voluntary exchange between the buyer and seller.

Warren Buffett, the world’s second richest man, delivered newspapers as a kid. He now owns a significant portion of that particular paper – ‘The Washington Post’. But, that is another story.

The point here is that Buffett, as a child growing up in America, imbibed the lesson, ‘you make money if you can induce someone to buy what you are selling – be it your labour, service or a good’.

The lesson which I had taught the kids in Nepal was, ‘block, obstruct, create problems, stop us from going where we want to and we will pay you to lift the restrictions you put in our path’.

I asked myself what would happen if one day one of the kids who had stopped us becomes a government officer? He would remember that the way to riches is by blocking and stopping people from doing things.

What if that kid grew up and went on to take charge of the customs department of HMG? Would he stop the release of goods until he was paid off? Would he stop the issuance of import licences until he got what he wanted?

If another of those kids became a Minister of Industry, would he expect a big pay-off from a foreigner wanting to establish an industry in Nepal? The way to riches for him would be to use his power to block the progress of other people.

Indeed, it may mean prosperity and riches for the government official and Minister, if they can block the grant of licences, restrict businesses, and have the power to tax them out of existence. What about us?

For you and I, it means poverty and destitution. What enriches bureaucrats and politicians, impoverishes the rest of us.

“Power corrupts and absolute power corrupts absolutely”. This is a cliché, but it’s true. We can afford to pay the officers of the government to sit at home and do nothing. But we can’t afford them if it means halting the progress of productive men and women.

The vested interests of those in government to maintain the status quo are so strong that minor tinkering with the system just won’t do. Changing government regulations won’t be enough. If we, for example, change the licencing policy into a mere registration requirement, but leave the bureaucrats in place, soon they will come up with a registration procedure which equals licencing in its complexity.

What is required is wholesale surgery? We have to excise major chunks of government, throw it away and not look back. Do away with licencing. End most taxes and whatever minimum you have to levy, simplify them so that interpretation by bureaucrats is dispensed with. Abolish exchange controls and allow foreign investment without an approval process.

Go one step further. Consider whether we really need all the ministries that we have at present. Government’s job is to keep us secure, enforce a rule of law, administer justice, and leave the rest to the people.

And, yes, it is time to take a stand against those kids. Next time around, I intend to refuse to pay them off.

(The writer an economist and a proponent of free markets contributes to leading international dailies. Contact e-mail: everest@mos.com.np)